Mexican Infrastructure Funding Surges As New President Takes Reins

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By Juan Pereira and Jonathan Carmody

Infrastructure fundraising in Mexico picked up rapidly in 2018, according to stock exchange filings and the government website Proyectos Mexico.

Both the number of new funds and the amount raised reached record highs last year. Fundraising in Mexico picked up rapidly in 2018, with fundraising of new and previous funds 38.5% higher than in 2017 and more than double compared to 2016.

But how these funds will be allocated is open to question given the context of cancellations and delays in project procurement by the new presidential administration, such as the $13 billion Mexico City airport project.

Of the 26 large infrastructure and energy funds (Certificates of Capital Development –CKD– and Certificates of Project Investment –CERPI–) launched in Mexico, eight were launched in 2018, with over $420 million of capital raised. In 2018, for the first time, more CERPIs were launched than CKDs.

The latest regulation of Mexican pension funds (Afores) allows them to invest up to 90% of Cerpis outside of Mexico. “I think we will see few Cerpis investing only in Mexican projects,” says Héctor Arangua Lecea, partner at law firm Nader, Hayaux & Goebel.

The presence of funds has added dynamism to the market and the new funds have a particular importance given that the fundraising activity is denominated in Mexican currency.

According to Inframation’s 2018 League Tables report, the total deal value for 2018 in Mexico was $10.68 billion, making fundraising equal to 8.7% of the total deal activity in the country. The percentage is larger than in previous years, with 5.82% in 2017 and 4.94% in 2016, according to Inframation estimates.

Inframation chartInframation, an Acuris company

“This sector has matured globally and in Mexico,” says Jaime Pérez de Laborda, partner at renewable energy fund manager Balam Fund. “Auction processes have made banks familiar with how financing the projects functions and attracted domestic and foreign funds to the country,” he adds.

Juan Pereira is a senior analyst with Inframation Latin America, covering Mexico. Jonathan Carmody is a news editor for Inframation Latin America and also writes on mergers and acquisitions in the region. Inframation is a sister product to Mergermarket under the Acuris umbrella. Inframation provides real time financing, trading news and data for the global infrastructure and energy sectors.

 

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